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Raymond James to pay back $1.69 million in overcharges to 15,500 investors

St. Petersburg-based Raymond James Financial has been ordered to pay more than $1.69 million in restitution to more than 15,500 investors who were charged "unfair and unreasonable commissions on securities transactions" dating back to 2006, securities regulators said Thursday.

The Financial Industry Regulatory Authority, which oversees U.S. securities firms, also fined Raymond James Financial $200,000 and its subsidiary Raymond James & Associates $225,000.

FINRA said it found that Raymond James used automated commission schedules in equity transactions that wound up charging thousands of customers excessive commissions between Jan. 1, 2006, and Oct. 31, 2010. Most of the transactions involved low-priced securities.

Regulators blamed the overcharges on inflated schedules and rates used by Raymond James that did not take into consideration issues like the type of security and size of a trade in setting its commissions.

"Raymond James failed to adequately monitor its supervisory systems, and as a result, both Raymond James & Associates and Raymond James Financial Services overcharged thousands of customers," Brad Bennett, FINRA executive vice president and chief of enforcement, said in a statement. "Broker-dealers must ensure that their automated systems set commission charges that are fair to investors."

In settling, Raymond James neither admitted nor denied the charges, but consented to the entry of FINRA's findings, the authority said.

Raymond James spokesman Steve Hollister said his firm was pleased to resolve the issue.

"The affected trades represent less than 0.1 percent of the total equity trades executed by Raymond James during the period reviewed," he said. "The average impact per affected account over the five-year time period is approximately $110."

Affected clients will be notified by their financial advisers and receive a credit to their accounts. Clients no longer with Raymond James will receive a check and letter explaining the refund.

Raymond James revised its automated commission schedule July 1 after being notified of FINRA's findings, Hollister added.

In 2010, FINRA ordered Raymond James Financial to pay $12 million, saying it was liable in a case involving broker raiding in four A.G. Edwards & Sons branches in Indiana, Illinois and Arkansas.

Raymond James to pay back $1.69 million in overcharges to 15,500 investors 09/29/11 [Last modified: Thursday, September 29, 2011 9:30pm]
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